Quantitative implications of the fiscal theory of the price level
AbstractThe traditional interpretation of effect of money on prices provided by the Quantity Theory of Money (QTM) has been challenged reciently by the Fiscal Theory of the Price Level (FTP). This paper analyzes the QTM and the FTP from different angle and provides quantitative results of the alternative interpretations. The analysis is based on a general equilibrium rational expectations model driven by monetary, fiscal, and productivity shocks. If the money supply relationship is the determinant of the price level we obtein the standard effects of shocks. However, if the goverment budget constraint is the relation that determines inflation, the impulse response function to the shocks are different. These results are a reference to evaluate the relevance of alternative monetary models: the quantitative implications of a fiscal theory and a a quantitative theory are not the same.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Facultad de Ciencias Económicas de la ULPGC in its series Documentos de trabajo conjunto ULL-ULPGC with number 2001-01.
Length: 17 pages
Date of creation: Jan 2001
Date of revision:
Contact details of provider:
Monetary and Fiscal Policies; Fiscal Theory of Price Level;
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Patricia Santana).
If references are entirely missing, you can add them using this form.